Wednesday, October 20, 2010

A Face for Radio

On thursday at 4pm Los Angeles time, I will do a Beijing radio nterview on China Radio International. This show is eager to talk to me about a recent blog post I wrote about China's industrial policy toward the "green tech" sector. While the U.S domestic green tech industry and the WTO are very worried about China's 0% interest rates offered to its green tech sector and its free land for "green tech" factories, I view China's policy as a "good thing". As I discuss here, we need "game changing" ideas and the basic R&D is a world public good. If China wants to pay for this R&D, I think this is great. They have free rode on us in the past and now we can free ride on their investments. The bottom line is that such investment acts to decarbonize the world economy. We need "green ideas" --- we need someone on the planet to pay for the basic R&D to make them happen. The U.S has not stepped up. If China fills this void, then we are all made better off. It is true that this new profit stream will end up in China's bank account but that is an equity issue not an efficiency issue and we economists care about efficiency!

I was sent the following memo:

"The US government has now picked the clean energy industry as the latest battleground with China over currencies and trade as it announced to proceed with an investigation into China’s support for its renewable energy industry, which could lead to litigation at the World Trade Organisation. Some Americans are worried that Chinese firms, using subsidized loans and free land provided by government, are "taking over" this exciting new growing industry. Is that true? And will China’s activist policy necessarily hurt the well being of the US?

To delve into the issue we are now joined by Prof. Matthew Kahn, an economics professor at UCLA.

1 Will China’s policy on clean energy necessarily hamper the US interest? Why do you think the US government initated the investigation?

2 Will the American consumers and manufacturers also benefit from the Chinese huge investment in green industries?

3 What senarios do you expect to play out in this row? And is it possible for both sides to cooperate to achieve a win-win result?"